Bridging cultural differences key to business with China

A basic understanding of Chinese culture and ethics is key to cementing successful business relations with China.

John Zerafa, managing director of China (Malta) Investments, an advisory firm specialising in Chinese commerce, says business customs are very different from European practices.

Maltese who do not make an effort to learn how the Chinese slowly nurture relations risk losing their patience with the lengthy manner in which business is conducted and potential partnerships often fail.

"The Chinese are not strange or arrogant," Mr Zerafa, who has a conversational grasp of Mandarin, explains. "They are just very proud of their culture. Their culture is ingrained in every aspect of their lives and it is even reflected in the way they do business.

"They have a strong sense of relationships, what the Chinese call Guanxi, which is why they take their time to build a rapport with potential business partners. They are very hospitable and several dinners are usually planned. They are particularly appreciative when their guests recognise the value of their culture."

The Chinese, Mr Zerafa points out, are loathe to losing face. Mian-zi is not only a matter of personal pride but also of reputation and social status. The Chinese never say 'no'. However, if they say they will be in contact at a later stage, it is to be taken as polite refusal.

Mr Zerafa was taken in by the culture in 1988 when his freight forwarding business initiated contacts with China. He says he considers himself "a citizen of the world" and began to travel for long periods as soon as he turned 18. He studied sociology at a Florence University, and at the age of 23, moved to Israel where he worked as secretary to the Latin patriarchate in Jerusalem. At the time, Mr Zerafa was a member of the lay religious Focolare Movement.

He witnessed the 1980 Intifada first-hand and recalls how a Rai journalist who visited the patriarchate for a feature was so impressed with the young Maltese that she mentioned him in the opening lines of a book she later wrote.

On his return to Malta, Mr Zerafa became involved in the cargo business and saw the mistakes other people were making when dealing with the Chinese.

"When Dom Mintoff was Prime Minister, Malta had a special relationship with China," Mr Zerafa explains. "The scenario changed when Malta joined the EU and networking with China now often involves going through Europe first. The importance of understanding Chinese culture was even recognised by the EU when it set up a one-year exchange programme five years ago to give people doing business with China the right expertise."

Three years ago, he met Biao Wang over the internet. A British Chinese, he is an MBA graduate from the University of Bedfordshire and worked in China before settling in the UK. He is the chief executive officer of Camellia Universal Limited, a business platform to facilitate networking and trade between the West and China.

The company offers Chinese business advisory services, business culture and opportunity training, ethical inspection of new product development, manufacturing and China outsourcing, and arbitration services. It has run training programmes in several countries and has affiliates in major cities.

On Mr Zerafa's invitation, he travelled to Malta and bought property here almost immediately. The relationship grew and Mr Zerafa is now director of Camellia Universal (Malta) Ltd, the Malta affiliate for Biao Wang's company.

Mr Zerafa says one of Camellia Universal's most recent exciting projects is facilitating a Chinese joint venture with the leading and oldest Saville Row bespoke tailoring company. Master tailors travelled to the UK to train in London and a workshop has now been opened in Ningbo, south of Shanghai. After measurements are taken in London, the English fabric is stitched by hand in China and despatched to clients in the City within a couple of weeks.

"The Chinese are fast learners, lower labour costs are involved and the quality of workmanship is high," Mr Zerafa explains. "Quality is and always will be an issue where China is concerned that is why supervision in paramount. That is also where the importance of professional consultancy comes in. Business with China cannot be taken lightly."

Mr Zerafa is also the Maltese representative of Global Market, a China sourcing specialist offering consultancy and mediation services.

The company is a one-stop shop for sourcing, logistics and financing.

"One of the problems Maltese firms would face when doing business with China is the low volumes involved in orders," Mr Zerafa points out. "This company understands that, and identifies the right samples, suppliers, and best ways to ship goods for smaller orders."

Mr Zerafa says that the business scenario in China is constantly evolving. The country has seen 10 to 11 per cent growth over the last few years and this year, growth is expected to reach seven per cent.

"Many argue that China is at the wrong end of the supply chain as foreign companies have flourished there," he points out. "In reality, the economic crisis is purifying China."